{"id":79656,"date":"2026-07-20T18:01:02","date_gmt":"2026-07-20T12:31:02","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=79656"},"modified":"2026-07-20T18:03:02","modified_gmt":"2026-07-20T12:33:02","slug":"government-new-pension-plan","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/20-07-2026\/government-new-pension-plan","title":{"rendered":"Government Works on New Pension Plan"},"content":{"rendered":"\n<p><strong>Syllabus: GS2\/Governance\/Social Security<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The government is working on a <strong>new contributory pension scheme<\/strong> for <strong>unorganised and formal sector workers.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Features<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The scheme is a part of the <strong>3.0 reforms phase <\/strong>of the<strong> retirement fund body Employees\u2019 Provident Fund Organisation (EPFO).<\/strong><\/li>\n\n\n\n<li>It will cover<strong> existing members and those excluded from the Employees\u2019 Pension Scheme (EPS).\u00a0<\/strong><\/li>\n\n\n\n<li><strong>Contributions: <\/strong>It is likely to allow <strong>contributions from multiple sources: <\/strong>workers themselves, employers, government co-contributions for workers in the lower wage segment, aggregators in the case of gig and platform workers, and corporate social responsibility (CSR) or third-party funds.<\/li>\n\n\n\n<li><strong>Each member will have an individual pension account.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>The system will compute the <strong>proposed Target Retirement Sum (TRS) <\/strong>dynamically based on the<strong> member\u2019s chosen pension goal <\/strong>and <strong>expected retirement age.\u00a0<\/strong><\/li>\n\n\n\n<li><strong>Adjustments to TRS will be allowed<\/strong> and contribution requirements could then be recomputed accordingly.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>The flexibility to decide the amount for pension payouts or the drawdown<\/strong> will be given to the member.\n<ul class=\"wp-block-list\">\n<li>The system will provide i<strong>nflation-adjusted projections<\/strong> as an optional feature.\u00a0<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>It would accumulate contributions over time, and will be invested in<strong> long-term government-backed securities, with annual crediting of interest.<\/strong><\/li>\n\n\n\n<li><strong>Other Types of Pensions:<\/strong> The scheme also proposes<strong> family and survivor pensions <\/strong>for spouse, children, and orphans funded through a pooled \u201cFamily Benefit Fund\u201d,.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The EPFO 3.0 reforms will bring<strong> new tech features<\/strong> and an <strong>upgrade <\/strong>to the core banking solution (CBS), and pave the way for <strong>PF contributions for all unorganised sector workers and gig workers.<\/strong><\/li>\n\n\n\n<li>It is in line with the <strong>Code on Social Security<\/strong> that brings gig and platform workers into the social security net for the first time.\n<ul class=\"wp-block-list\">\n<li>The Code mandates aggregator contributions of <strong>1-2% of annual turnover <\/strong>for social security, with the total contribution not exceeding 5% of the amount payable by the aggregator.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The retirement fund models of other countries such as <strong>Singapore are being studied to incorporate the best practices.\u00a0<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Pension Coverage in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A Pension provides a<strong> steady monthly income to people <\/strong>during their <strong>unproductive years.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>Declining earnings, rise of nuclear families, migration of earning members, rising living costs and longer lifespans weaken financial security. Pensions ensure a dignified and independent life.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>India\u2019s pension architecture:\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Defined benefit pension systems<\/strong> for eligible Government employees, which guarantee a fixed post-retirement income.<\/li>\n\n\n\n<li><strong>Contributory pension arrangements <\/strong>where individuals or\/and employers contribute to retirement savings.<\/li>\n\n\n\n<li><strong>Statutory payroll-linked schemes<\/strong> for organised private-sector workers that mandate employer and employee contributions.<\/li>\n\n\n\n<li><strong>Tax-funded social assistance pensions<\/strong>, which support elderly, widowed and vulnerable individuals with limited or no formal income sources.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"60a7cf\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"769\" height=\"409\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-190.png\" alt=\"pension coverage in india\" class=\"not-transparent wp-image-79658\" style=\"--dominant-color: #60a7cf; width:371px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-190.png 769w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-190-300x160.png 300w\" sizes=\"auto, (max-width: 769px) 100vw, 769px\" \/><\/figure>\n<\/div>\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"bfcedb\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"623\" height=\"371\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-189.png\" alt=\"\" class=\"not-transparent wp-image-79657\" style=\"--dominant-color: #bfcedb; width:365px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-189.png 623w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-189-300x179.png 300w\" sizes=\"auto, (max-width: 623px) 100vw, 623px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>All-Citizen Contributory Pension Mechanisms<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To extend retirement savings beyond formal employment,<strong> voluntary contributory options are available.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>These include the<strong> NPS and the APY (Atal Pension Yojana)<\/strong> for individuals outside statutory payroll coverage.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>The NPS all-citizen model:<\/strong> It allows voluntary enrolment within prescribed age limits, flexible contributions and choice of investment options. It operates through a two-tier account structure:\n<ul class=\"wp-block-list\">\n<li><strong>Tier I,<\/strong> which is the primary retirement account with certain withdrawal restrictions and;<\/li>\n\n\n\n<li><strong>Tier II,<\/strong> a voluntary savings account offering greater liquidity.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>NPS Vatsalya: Pension Account for Minors: <\/strong>Under this scheme, parents or legal guardians can open and operate a pension account for a minor. Contributions are made until the minor attains the age of majority.\n<ul class=\"wp-block-list\">\n<li>The scheme promotes early retirement savings and long-term financial planning.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Atal Pension Yojana (APY):<\/strong>It is a contributory scheme for low-income subscribers, with enrolment facilitated through banks and post offices.<\/li>\n\n\n\n<li><strong>Non-Contributory Social Pension Framework: <\/strong>It provides basic income support through tax-funded transfers to elderly individuals in informal employment who lack retirement savings.\u00a0<\/li>\n\n\n\n<li><strong>National Social Assistance Programme (NSAP): <\/strong>NSAP provides financial assistance to the economically vulnerable individuals.\n<ul class=\"wp-block-list\">\n<li>States\/UTs are encouraged to provide top-up of at least an equivalent amount to the assistance provided by the Central Government.\u00a0<\/li>\n\n\n\n<li>This ensures that the beneficiaries avail decent level of assistance.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>As demographic transition accelerates, retirement income security becomes vital for long-term stability.\u00a0<\/li>\n\n\n\n<li>Wider coverage, prudent asset management and efficient service delivery are also essential.\u00a0<\/li>\n\n\n\n<li>Ongoing policy and institutional evolution strengthen the pension system.\u00a0<\/li>\n\n\n\n<li>It supports inclusive and sustainable old-age income security in the years ahead.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: IE<\/strong><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> The government is working on a new contributory pension scheme for unorganised and formal sector workers. <\/li>\n<p><\/p>\n<p><strong> Major Features <\/strong><\/p>\n<li class=\"ms-5\"> The scheme is a part of the 3.0 reforms phase of the retirement fund body Employees\u2019 Provident Fund Organisation (EPFO). <\/li>\n<li class=\"ms-5\"> It will cover existing members and those excluded from the Employees\u2019 Pension Scheme (EPS).\u00a0 <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/20-07-2026\/government-new-pension-plan \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-79656","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=79656"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79656\/revisions"}],"predecessor-version":[{"id":79662,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79656\/revisions\/79662"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=79656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=79656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=79656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}